Question

How do the location and size of warehouses affect the performance of a firm such as IKEA?
​

Answer 1

The location and size of warehouses can greatly impact the performance of a firm like IKEA in terms of transportation costs, delivery times, inventory management, and product offerings.

Step-by-step explanation:

The location and size of warehouses can greatly affect the performance of a firm like IKEA. Firstly, the location of warehouses determines their proximity to suppliers and customers, which impacts transportation costs and delivery times. For example, having warehouses located strategically close to key markets can reduce transportation costs and enable faster order fulfillment. Secondly, the size of warehouses influences the firm's storage capacity and ability to manage inventory efficiently. A larger warehouse can accommodate more products, allowing the firm to carry a wider range of items and maintain higher inventory levels to meet customer demand. Conversely, a smaller warehouse may limit the firm's product offerings and require more frequent stock replenishment.

Answer 2

Just guessing here, but could it be that the storage directly affects the layout which can determine the size. Ikea is known as a furniture store, so of course they need space to sell things like beds, couches, etc. In a smaller Ikea you cannot sell as many couches & refrigerators as you could in a larger Ikea, also you may have a larger variety. In turn if a customer enters a smaller Ikea said customer may not find the item they were looking to purchase & as a result may leave. Whereas in a larger Ikea they are more likely to find their item & make a purchase causing the business to gain more profit. Therefore sizing determines product, product determine profit and without a profit there is a much worse performance.